TAX PLANNING LAST MOMENT PLANNING FOR FY 2014-15

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For information on Tax for FY 2015-16 ( AY 2016-17 ), CLICK HERE NEWS ALERT DATED 04.06.2015 : NEW ITR FORMS FOR AY 2015-16 RELEASED . FOR DOWNLOADING VARIOUS FORMS AND TO KNOW ABOUT APPLICABILITY OF VARIOUS FORMS , CLICK IT RETURNS NEW S ALERT DATED 01.06.2015 ;INCOME TAX DEPT HAS MADE FOLLOWING ANNOUNCEMENTS : LAST DATE FOR FILING NOW AUGUST-END; DROPS REQUIREMENT OF FOREIGN TRIP EXPENSES AND DORMANT BANK A/C DISCLOSURES IN A RELIEF TO INCOME TAX RETURN FILERS THE FINANCE MINISTRY ON SUNDAY SAID IT HAD DECIDED TO SIMPLIFY THESE. HOWEVER, WHILE REDUCING THE NUMBER OF PAGES, THE GOVERNMENT HAS RETAINED CLAUSES MEANT TO CURB TAX EVASION. WITH THE NEW E-FILING RETURN FORMS EXPECTED ONLY BY THE THIRD WEEK OF JUNE, THE GOVERNMENT ALSO EXTENDED THE LAST DATE FOR FILING OF RETURNS TO AUGUST-END FROM THE USUAL JULY-END.

News alert dated 19.04.2015 :Government today announced that new Income Tax Return (ITR) forms that require disclosure of details regarding bank accounts and foreign trips undertaken by an individual will be reconsidered, a move that comes after criticism from tax experts and others.It will come out with simplified ITR forms, it was officially announced. So relax and wait for further announcements from the government .

HIGHLIGHTS OF MR ARUN JAITLEY'S BUDGET SPEECH

1. RBI ACT IS GOING TO BE CHANGED 2. Fiscal Deficit target of 3 % is postponed by a year 3.MUDRA BANK to be started for helping small self enterprises 4. Post offices will do banking activities 5. Universal social security programme will be started 6. GST will be implemented fro April 2016 7. Corporate tax will be reduced by 5 % in next 4 years from 30 % to 25 % 8 FDI and FPI will be integrated 9 . GAAR is to be postponed by 2 years 10 . Wealth tax is to be abolished . 2 % additional income tax for super rich 11. Benami transaction prohibition Bill will be introduced 11. Not filing of returns on foreign assets will attract 7 years imprisonment 12. Health insurance premium limit to RS 25,000 and for senior citizens to Rs 30,00013. Transport Allowance increased to rs 1,600 from Rs 800 pm14 . Individual tax payers can get exemptions up to Rs 4,44,200 15. Service tax increased to 14 %

For full text of Mr Arun Jaitley's budget speech on 28.02.2015 , CLICK HERE ( Link to third party website )

TAX PLANNING FOR FY 2014-15

PLAN N PROGRESS

FEW TIPS FOR INCOME TAX PLANNING 1. Estimate total income including salary , interest or any other income for the current year April 2014 to March 2015 2. Take stock of payments like Provident Fund already paid by your employer , Insurance Premium you have paid or any other instrument you have purchased which is eligible for Tax concession . 3. Collect the details of Housing loan and education loan instalments paid during the year and interest paid / payable forthem for the year . 3.Go to Income Tax Department , Govt of India website http://www.incometaxindia.gov.in/Pages/tools/income-tax-calculator-234ABC.aspxand calculate the estimated income tax liability for the current year .

4. We have given below tax rates and various concessions available under various sections of Income Tax act . Verify whether you can utilise any of the concessions and the amount you can invest to avail maximum concession under the each section . For full list of all concessions , you can go to following website of Income tax Department http://www.incometaxindia.gov.in/pages/tax-information-services.asp 5. While purchasing insurance policy or any other financial instrument like pension plan , mutual fund etc ., discuss with the financial advisors / consultants / agents etc who are selling the product regarding the tax concessions available specifically for the instrument in question and reconfirm by going to the website of the issuer . Some advisors / consultants who have their interest in selling these products may mis-inform you about the concessions available .

6. Verify such concessions are useful to your tax plan and you can make use of such concession for the present year .

7. Beware of the instruments like unit linked policies , ELSS etc which are linked to market performance . Such instruments will perform only when stock markets. perform . Some times long terms returns are shown with illustrative rates which may look lucrative . Please remember that those rates are only illustrative and the such returns may become illusive if Net Asset Value ( NAV ) does not grow and if sellers do not guarantee the return . Know the risks of investing in such high risk products .

8. If instruments warrant repetitive payments say monthly or annually , please check your financial position with regard to affordability of the product for you for long term .

9. After making all the payments and investments and after getting the total income correctly calculated , you can go again to income tax Dept site and arrive final tax liability . 10. If you are eligible to submit form 15H or 15G to the banks , do it well in time , preferably at the beginning of the financial year or immediately now , for avoiding TDS on interest paid by the bank .

11. For authentic details of all the matters relating to Income tax , go to the website of Income Tax Department , Government of India :http://www.incometaxindia.gov.in/

ALL ABOUT TDS AND FORMS 15G AND 15H

When Banks will deduct TDS for interest paid ?

The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 10,000 in a financial year.

Who is eligible to submit Form 15G

A resident person or HUF , whose tax on the estimated income for the year is nil and the amount of interest income from all the sources does not exceed the minimum exemption limit ( presently Rs 2,50,000/- ), can submit the Form.15G . Please note that both conditions are to be fulfilled to become eligible to submit the form 15G.

Who can submit form No. 15H?

A resident senior citizen l who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H provided his estimated tax liability is nil for the financial year though the total amount of interest from all sources may exceed Rs. 2.50 lacs, the minimum amount liable for tax.

Caution : Any wrong or false / wrong declaration attracts penalty under section 277 . A person can be prosecuted and can be liable for 3 months to 7 years of imprisonment for such false declarations . Hence please check your eligibility before submitting the forms .

Employers will issue Form 16 ,( Certificate under section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head “Salaries” ) for all the tax deducted at source while disbursing salaries . The certificate can be used for computing actual income and tax deducted at source . Format of Form 16 can be downloaded here DOWNLOAD FORM 16

INCOME TAX RATES / SLABS FOR FY 2014-2015

INCOME TAX REBATES

Cumulative deduction allowed under Section 80C, 80CCC, and Section 80 CCD(1) for savings/investments, premium for annuity / pension fund and employee contribution to NPS respectively is Rs. 1.5 lakh Deduction under 80 CCG for of 50 % of investment under the scheme with a maximum deduction of Rs 25,000 allowed . Deduction allowed on Health insurance Policies under 80 D is Rs. 20,000/- for senior citizens and upto Rs. 15,000/ for others

Interest on savings bank accounts are exempted by tax up to an amount of Rs 10,000 under Section 80 TTAIncome Tax exemption on Interest paid on housing loan under Section 24 of the Income Tax Act is Rs. 2 lakh

Payments made in installments or part payment for purchasing or constructing a house property.(conditions Apply )

Tution fees paid to any Indian school,college, university or other educational institutions ( Conditions Apply )

New addition this year : Contribution made to Sukanya samriddhi account

UTILISE TUITION FEE FOR REBATE UNDER 80C

Total tuition fee paid by a parent for maximum of two childern is eligible for tax exemption under 80C . " Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children " is eligible to be deducted under 80C .

Tuition fees paid for self or spouse is NOT eligible under 80C . Fees paid to educational institutions situated outside India are not eligible . Only University, college, school or other educational institution must be situated in India though it can be affiliated to any foreign institutes.

Tuition fee Paid for children for full time courses only is eligible . Obviously fees paid for coaching classes will not be eligible . - Pre-nursery, play school and nursery class fees is also covered under section 80C (circular 9/2008 & 8/2007).

If both husband and wife are tax payers , both can utilise the deduction separately for the individual payments made by them .

Not allowable Expenses:- 1. Development fees or donation not eligible. 2. Transport charges, hostel charges, Mess charges, library fees, scooter/cycle/car stand charges incurred for education are not allowed. 3. Late fees is not eligible for deduction. 4. Term Fees is not eligible for deduction.

POPULAR TAX SAVING SCHEMES

Array of products from 1. Guaranteed return schemes like PPF AND NSC 2. Insurance schemes which cover life risks with units linked to market or otherwise 3.Equity linked mutual funds which have high risk and return probabilities like ELSS are available for the investors to utilize the rebates on income tax offered by the government .

PPF is a fixed income long term investment while NSC is fixed return medium term investment . Insurance policies which cover life risk are available in unit linked market related schemes and otherwise also . On the other hand ELSS is totally market related mutual fund which carry all the risks of an equity market and have given good returns Details of Each scheme is given below :

PUBLIC PROVIDENT FUNDS

SALIENT FATURES :

Ideal investment option for both salaried as well as self employed classes.

Non-Resident Indians (NRIs) are not eligible.

Investment up to INR. 1,50,000 per annum qualifies for IT Rebate under section 80 C of IT Act.

The rate of interest on the subscriptions made to the fund on or after 01.12.2011 and balances at credit of the subscriber in the existing PPF account shall bear interest at the rate of eight point seven per cent (8.70%) per annum.

Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.

Withdrawal permitted from 6th financial year.

Free from court attachment.

An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.

Public Provident Fund(Individual account on his behalf or on behalf of minor of whom he is the guardian)INR. 500/- in a financial yearINR. 1,50,000/- in a financial year

The public provident fund is established by the central government.

One can voluntarily open an account with any nationalized bank,selected authorized private bank or post office.

SAFE , SECURE , TAX EFFICIENT AND LIMITED LIQUIDITY AVAILABLE FROM 3RD YEAR BY WAY OF LOAN FACILITY

A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.

Rate of interest 8.80%.

Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 236.60 after 10 years.

Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.

NSCS ARE AVAILABLE ONLY IN POST OFFICES ALL OVER INDIA

LIFE INSURANCE POLICIESLife insurance policies are the financial instruments which cover Life Risks of the insured along with Tax relief . Various types of life insurance policies are available with wide ranging terms . Some are unit linked policies whose Net Asset value depends up on the equity market and hence carry market risks . For full details on Life Insurance and tips for purchasing such policies , please go the page LIFE INSURANCE

EQUITY LINKED SAVING SCHEME ( ELSS ) is another popular scheme under which investors can invest in stock market mutual fund while enjoying tax benefits under 80C of Income Tax act .

WHAT IS AN ELSS SCHEME ?

Subscription to certain notified securities/notified deposits schemes are eligible instruments under section 80C for claiming deductions from taxable income . One such popular investment is tax saving mutual funds or Equity Linked Savings Scheme (ELSS). In this equity diversified fund , investors enjoy the benefits of capital appreciation as well as tax benefits. With recent positive movements in equity market , more interest is being generated in the public on the scheme .

ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years . It has got same risk and reward function of any other equity based mutual fund . While under national saving certificate , funds are locked in a period of 6 years , ELSS has lock in period of 3 years only . One who is willing to take market risk , ELSS is a good option as investment is tax free under 80C as also all the returns . Some ELSS funds have been reported giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund as well as fund manager's performance before investing . As returns or principal is not guaranteed and classified as high risk investment , Risk averse persons may avoid such investment . Persons interested in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers

THIS ARTICLE CARRIES INFORMATION ON VARIOUS TAX PROVISIONS WHICH ARE GENERALLY USEFUL . YET IT DOES NOT CARRY ALL THE PROVISIONS AND HENCE YOU ARE ADVISED TO GO THROUGH INCOME TAX DEPARTMENT WEBSITES FOR AUTHENTIC COMPLETE INFORMATION , ESPECIALLY FOR THOSE WHO HAVE GOT MULTIPLE STREAMS OF INCOME OR COMPLEX INVESTMENTS . YOU MAY ALSO CONSULT A QUALIFIED TAX CONSULTANT / CHARTERED ACCOUNTANT FOR ANY CLARIFICATION. READERS ARE ALSO WELCOME TO SEND FEEDBACK , FORM AVAILABLE BELOW . WE ARE OPEN FOR CORRECTION IF NEEDED

VERIFY YOUR TAX CREDIT

Your employer or your banker would have deducted income tax from your salary / interest etc and remitted to Income Tax Department . You could have also paid tax directly . Whether such amounts have gone to your account only ? Whether there was any error from TDS payers while remitting ? You can verify yourself on line whether all the amounts deducted have gone to your account only . There are two methods . One method is to register at TRACES ( TDS Analysis and Correction Enabling System ) and you can view your tax credit form 26AS since assessment year 2009-10 . The other method is to get by your Income Tax e- filing website https://incometaxindiaefiling.gov.in . if you have not registered there , you can register and view your tax credits . .

If you find any discrepancies in your tax credits , you can contact the TDS Deductors , find the reasons and get it rectified . This step will save you in future in avoiding unnecessary tax demands from the department .

FILING OF INCOME TAX RETURNS

Income Tax returns can be filed on line . For further details visit IT RETURNS Page

Further there are practical tips for computing tax which can be read and used . For example , the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .

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